© Reuters. At the Bombardier booth at the National Business Aviation Association (NBAA) exhibition in Las Vegas, employees apply a Rolls-Royce sticker to the engine of a Bombardier Global 6500 business jet
LONDON (Reuters) – British engineering firm Rolls-Royce (OTC 🙂 raised £ 2 billion ($ 2.6 billion) on Thursday from a rights issue to bolster its pandemic-hit finances after shareholders voted for 94% of the new shares and the rest were sold through a trunk placement.
Airlines pay Rolls-Royce based on the number of hours their engines have been flying. As a result, the company's finances have come under increasing pressure after COVID-19 suspended travel earlier this year.
The capital increase opens up new debt options for the company, including £ 2 billion from a bond issued in October and a £ 1 billion bank loan as part of a total liquidity package of £ 5 billion.
The vast majority of shareholders were in favor of the capital increase, but the results showed that there was some disagreement over the issue of one of the UK's best-known industrial names, with 6% of newly issued shares not originally being included.
The company said in a statement that including 10 underwriting banks Citigroup (NYSE :), Goldman Sachs (NYSE 🙂 and Morgan Stanley (NYSE 🙂 had successfully gained subscribers for the rest of the stocks.
With the new liquidity package, CEO Warren East Rolls-Royce can take COVID-19 out of circulation and save £ 1.3 billion in costs, cut 9,000 jobs and close factories to cope with lower demand from airline customers working with The company's engines fly on Boeing (NYSE 🙂 787s and Airbus 350s.
The company's shares were down 8% at 90p at 1240 GMT. In the rump placement, the new shares were sold at a price of 90 pence per share, the company said.
The stock had a roller coaster week. Thanks to news of a vaccine, stocks rose over 90% at one point on Monday but closed 10% on Wednesday. They have lost 61% of their value in the year to date.
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